Mr Lewis, whose clients include the family of murdered schoolgirl Milly Dowler, whose phone was hacked by Mulcaire, said he believed illegal voicemail interception was widespread because there was no other means for journalists to get certain information.

"It is evidence-based conclusions, certainly on a civil basis, of what I am being told by clients and taking instructions from them as to whether or not stories are written that could not have got to newspapers in any other way," he said.

"Phone hacking might only give two or three parts of the jigsaw, but it might suggest that so-and-so a person will be at such an address, or so-and-so a person is speaking to somebody.

"Or the journalist then knows which address to go to, or who they are speaking to or who they are having a relationship with."

Mr Lewis also told the inquiry that News of the World journalists wrongly concluded Professional Footballers Association (PFA) chairman Gordon Taylor was having an affair after hacking his phone.

He said the paper's reporters misinterpreted a voicemail message from a woman thanking Mr Taylor for speaking at her father's funeral.

Mr Lewis told the inquiry that a photographer working for the News of the World took a picture of Joanne Armstrong, then the PFA's in-house solicitor, having lunch with Mr Taylor in the mid-2000s.

The lawyer wrote to the Sunday tabloid ordering it not to publish the photograph and threatening to apply for an injunction.

He said the News of the World's lawyer, Tom Crone, replied saying the paper would not run the story but refusing to pay damages or costs because it was obtained through "proper journalistic inquiries".

Mr Lewis rejected the explanation, telling the inquiry: "It just wasn't a proper legitimate investigation. It was a phone had been hacked in order to get that story."

Mr Taylor had spoken at the funeral of Ms Armstrong's father and she left a message on his phone the next day saying, "Thank you for yesterday, you were wonderful", the inquiry heard.

Mr Lewis said: "The tabloid journalist who knew of that message added two and two and made 84. They couldn't possibly conceive of any other explanation.

"If it hadn't been so sad, it would have been funny."

Mr Lewis said he realised Mr Taylor's phone had been hacked after seeing a news report about Goodman and Mulcaire pleading guilty to illegally intercepting the voicemail messages of royal aides.

Mr Lewis went on to describe the reaction of News of the World publisher News Group Newspapers after Mr Taylor launched a claim against the paper.

He was told the publisher's lawyer Tom Crone would come and see him, which he claimed was not just a surprise but also "a very big giveaway".

He said: "The fact he was coming to see me suggested they had something to hide."

But when he put to Mr Crone the figure of £250,000 as a possible settlement fee for Mr Taylor, Mr Crone "just got up and left", he said.

However, he went on, the company's position changed when he presented its solicitors with the "for Neville" email, which contained transcripts of hacked messages from Mr Taylor's mobile phone and was apparently intended for chief reporter Neville Thurlbeck.

"That's when negotiations started," he said. "It was one of those occasions when you have to do the smoking gun."

The publisher made a settlement offer of £50,000, which "quickly went up to £100,000", he told the inquiry.

A "flurry of activity" on the publisher's part eventually culminated in an offer of £250,000, he said.

The final figure was £425,000 for damages plus costs, the inquiry heard.